Post Session: Quick Review

Indian equity benchmarks traded on a firm note throughout the day and ended the session with gains of over eight tenth of a percent. The markets climbed sharply higher in last hour of trade with two stocks advancing against every declining stock. The equity benchmarks made a gap-up opening and traded in fine fettle in early deals as traders took support with a blog on Asian Development Bank’s website, stating that the goods and services tax in India will benefit the lower and lower-middle income class as it is likely to reduce the tax rate on goods. It further stated that in general, GST is likely to reduce the tax rate on goods as compared to previously, while tax rates on services are expected to increase. Some support also crept in after the Financial Stability & Development Council (FSDC) enlightened that India has macro-economic stability today on the back of improvement in its macro-economic fundamentals and structural reforms with the launch of the Goods and Services Tax (GST). The Council, comprising regulators, took note of the overall stability that has been achieved on the back of improvements in macro-economic fundamentals, structural reforms with the launch of the GST, action being taken to address the twin balance sheet challenge and financial market confidence.

Meanwhile, PSU banks stocks rallied after Cabinet Committee gave in-principle approval for the next level of merger. The Cabinet has approved setting up alternative mechanism for PSU banks merger, which may lead to faster consolidation of PSU banks. The in-principle approval for next level of PSU bank merger has been given and the names of the banks for the merger will be submitted to the GoM. The name of banks to be merged will be decided on four major points - profit of banks, cover similar regions, must have comparable asset quality & capital adequacy ratios. Investors shrugged off the private report which highlighted that growth revival in India remains a concern due to subdued consumption and investment demand even nine months after demonetization and nearly two months post GST rollout. It also cited mounting bad loans and weak corporate balance sheets as well as farm loan waivers as compounding the problem.

On the global front, Asian markets closed mixed, while Hong Kong was shut on account of Hato. Investors were eyeing Jackson Hole, Wyoming conclave of central bankers this week that could provide fresh insight into policy options. Singapore’s industrial production likely rose at the fastest annual pace in seven months in July, thanks to a global electronics boom. European markets were trading mostly lower amid sharp declines in advertising giant WPP after it cut sales forecasts on weakening demand. Markets also shrugged off a PMI survey showing euro zone manufacturing businesses had their best month of growth in six and a half years in August.

Back home, telecom stocks like Bharti Airtel, Idea Cellular, Reliance Communications, MTNL and TTML closed in green as the Inter-Ministerial Group (IMG) on telecom industry hinted on extending the timeline for deferred spectrum payment by telcos to 16 years instead of 10 at present. Infosys closed in green on reports that one of its co-founder Nandan Nilekani is likely to re-join the company as the head. The developments come a few hours after Narayana Murthy postponed his conference call with Infosys investors citing health issues.

The BSE Sensex ended at 31558.41, up by 266.56 points or 0.85% after trading in a range of 31379.25 and 31593.39. There were 24 stocks advancing against 7 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 1.39%, while Small cap index was up by 1.21%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 3.40%, Telecom up by 2.02%, Metal up by 1.89%, Basic Materials up by 1.51% and Bankex up by 1.35%, while Consumer Durables down by 0.72% and FMCG down by 0.14% were the only losing indices on BSE. (Provisional)

The top gainers on the Sensex were Bharti Airtel up by 2.93%, Adani Ports & Special Economic Zone up by 2.78%, Tata Steel up by 2.48%, Tata Motors up by 1.97% and Infosys up by 1.90%. (Provisional)

On the flip side, Hindustan Unilever down by 1.06%, Sun Pharma down by 0.50%, ITC down by 0.42%, TCS down by 0.24% and Power Grid down by 0.21% were the top losers. (Provisional)

Meanwhile, terming the rollout of the Goods and Services Tax (GST) in India beneficial for the lower and lower-middle income class as it is likely to reduce the tax rate on goods, a blog on Asian Development Bank (ADB) has said that tax rate on goods is likely to be reduced as compared to previously with new tax regime and this will benefit the lower and lower-middle income class by lowering their burden.

An international development finance institution is however, expecting increment in services’ tax rates on account of GST and added that GST might put burden on upper middle-income and high-income households. It further noted that the impact on overall economy business, households and government organizations is expected to be multi-faceted.

The blog said that as household bundle of goods and services differs with income level, preferences, age composition and other factors under the GST regime, the impact of it may also vary across households. It praised the government’s initiatives along with the design and time of launching of GST, saying that the timing has been favourable from global and domestic perspective in minimising the impact of it on cost of living

The CNX Nifty ended at 9847.60, up by 82.05 points or 0.84% after trading in a range of 9786.75 and 9857.90. There were 36 stocks advancing against 15 stocks declining on the index. (Provisional)

The top gainers on Nifty were Indiabulls Housing up by 3.87%, Bharti Airtel up by 2.70%, Tata Steel up by 2.66%, Adani Ports & Special Economic Zone up by 2.44% and Vedanta up by 2.41%. (Provisional)

On the flip side, Tech Mahindra down by 2.06%, Tata Power down by 1.75%, Bharti Infratel down by 1.29%, Eicher Motors down by 1.12% and Hindustan Unilever down by 0.80% were the top losers. (Provisional)

The European markets were trading mostly in red; UK’s FTSE 100 decreased 1.87 points or 0.03% to 7,379.87, Germany’s DAX decreased 7.6 points or 0.06% to 12,221.74, while France’s CAC increased 1.66 points or 0.03% to 5,133.52.

Asian equity markets ended mixed on Wednesday as US President Donald Trump's comments that he may end the North American Free-Trade Agreement which raised concerns over its impact on global trade. Also, Trump threatened to shut down the government if he fails to generate funds to build his controversial wall along the Mexican border. Geopolitical risks also remained in focus after the United States announced new sanctions on Chinese and Russian entities for their alleged ties to North Korea's nuclear weapons program. Chinese shares ended on a flat note as steelmakers succumbed to profit taking, offsetting gains in the banking sector on optimism over earnings. Meanwhile, Japanese shares eked out modest gains to snap a five-day losing streak as the yen weakened and a survey showed activity in Japan's manufacturing sector continued to expand in August and at a faster pace. Trading in Hong Kong was suspended due to tropical cyclone Hato.